The Daily: Usual Money update causes a stir, UK clarifies crypto staking exemption and more

It's Friday! With the weekend just around the corner, settle in as we get you up to speed on some usual—and unusual—news in the crypto space. 

In today's newsletter, a Usual Money update sparks community criticism, the UK clarifies its crypto staking rules, Bybit is set to restrict services in India and more.

Meanwhile, Sam Altman's World crypto project surpasses 10 million human verifications.

Let's get started.

Usual Money update causes a stir

Usual Money’s USD0++ token dropped 10% from $1 to $0.90 via decentralized exchanges on Friday following the protocol's dual exit update, sparking concerns about stability and transparency .

• While Usual's USD0 is a U.S. Treasuries-backed stablecoin, currently pegged to $1, its liquid staked version, USD0++, functions like a four-year zero-coupon bond, earning USUAL tokens upon maturity.
• The project introduced dual exit paths: redeeming USD0++ at a $0.87 floor price, which will gradually increase to $1 over the next four years, or 1:1 early unstaking from next week by sacrificing a portion of accrued yields.
• Some community members criticized the sudden move, claiming redemption had been hard-coded to $1 on decentralized exchanges and previously marketed as such.
• However, others defended the update, suggesting it aligned with USD0++'s bond-like nature and offered long-term benefits.
• Following the change, many holders rushed for the exits, with millions of USD0++ offloaded, causing a severe imbalance in its largest USD0/USD0++ Curve pool.
• The Block reached out to Usual Money for comment.

UK clarifies crypto staking exemption

The UK Treasury has amended legislation, clearly exempting crypto staking from rules governing collective investment schemes.

• A CIS refers to any pooled investment arrangement where participants share in the income generated.
• The change provides clarity for crypto firms operating in the UK, allowing them to offer qualified staking services without being subject to the stringent regulations governing CIS activities.
• The amendment defines "qualifying cryptoasset staking" as validating blockchain transactions, ensuring it is distinct from pooled investment arrangements.
• The amended legislation was laid before the UK Parliament on Thursday and is set to take effect on Jan. 31.

Bybit set to restrict services in India

Crypto exchange Bybit is set to temporarily restrict services in India from Jan. 12, citing regulatory developments and ongoing efforts to finalize its Virtual Digital Asset Service Provider registration in the country.

• Indian users will be unable to open new trades or use most platform features, though withdrawals remain unaffected.
• Existing derivatives positions will shift to close-only mode, while other services like copy trading, peer-to-peer ads, Bybit Card transactions and trading bots will also be restricted.
• Bybit said it plans to resume full services in India once it completes the registration process with the country's Financial Intelligence Unit, which it expects to secure "in the coming weeks."

A BoLD vote for the Arbitrum DAO

The Arbitrum DAO is currently voting on a highly anticipated improvement proposal to transition Arbitrum One and Arbitrum Nova to the Bounded Liquidity Delay or BoLD protocol.

• Live on the Arbitrum testnet since April 2024, BoLD is a dispute protocol with interactive fraud proofs for optimistic rollups, which can be used across Arbitrum chains for improved security.
• The proposal could introduce a fixed dispute resolution window to Arbitrum, minimizing delay attack risks and strengthening withdrawal security to Ethereum.
• If approved, BoLD will launch on Arbitrum One and Nova in February, with the vote garnering near-unanimous onchain support from community members so far.

K-pop CEO accused of crypto scam

Cube Entertainment co-CEO Kang Seung-kon is accused of misleading investors in a crypto project called Nestree by falsely guaranteeing returns, according to local media reports.

• Nestree's price surged nearly 10x following Cube's 2022 investment but later collapsed, leading investors to consider legal action against Kang, who has denied the allegations.
• The Kosdaq-listed firm is one of the largest companies in South Korea's music industry, reporting revenues of $109 million in the first three quarters of 2024, and manages K-pop acts, including (G)I-DLE and Pentagon.

Looking ahead to next week

• The latest U.S. PPI data are released on Tuesday. U.S. and UK CPI figures follow on Wednesday. Eurozone CPI numbers are out on Friday.
• U.S. FOMC members John Williams, Thomas Barkin and Neel Kashkari are all scheduled to speak.

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